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Indo-Lanka CEPA

Sri Lanka and India are due to sign the long-awaited Comprehensive Economic Partnership Agreement (CEPA) on the sidelines of the South Asian Association for Regional Cooperation (SAARC) Summit next month in Colombo. Coming more or less 10 years after the groundbreaking Indo-Lanka Free Trade Agreement, the CEPA marks yet another milestone in the very close relationship between the two countries.

The FTA was a first for both India and Sri Lanka. The latter has gone on to sign a similar pact with Pakistan while the CEPA with the Sri Lanka is only the second such agreement for India. This proves that both countries are very keen to consolidate their trade ties within the SAARC structure.

The FTA can be a gauge for measuring the potential success of the CEPA which has come to fruition after three years of negotiations at the top level.

Sri Lanka’s trade volume with India has seen a rise to US$ 516 million from a paltry US$ 49 million at the start of the pact.

India’s trade volume with Sri Lanka now stands at US$ 2.7 billion (2007) from US$ 549 million in 1999. Sri Lanka hopes to raise her volume of trade with the giant neighbour to US$ 1.5 billion by 2012.

These are by no means insignificant figures and the CEPA will augment the existing trade patterns between the two SAARC nations. In fact, it was disclosed yesterday that India has agreed to grant more concessions for garment imports from Sri Lanka.

The three million pieces quota allowed under the FTA will be increased to six million on a duty free basis while another two million pieces will receive 75 per cent Margin of Preference without restrictions on sourcing of fabrics.

We hope that these steps would help bridge the gap between the trade volumes, which is still in favour of India. The reduction of the negative lists proposed under the CEPA will help this endeavour. Furthermore, many more Indian companies are investing in Sri Lanka.

Indo-Lanka ties have reached a zenith in recent times, with closer cooperation in virtually all spheres. President Mahinda Rajapaksa is due to visit India before the SAARC Summit for discussions with Indian leaders.

Such visits by the Heads of State and Foreign Ministers have been a common feature in the excellent relationship between the two neighbours.

Apart from SAARC, Sri Lanka and India are members of several other blocs including BIMSTEC which is currently holding a summit in Dhaka. The two countries have been pursuing a common agenda at these fora.

People-to-contact is also gaining due attention, with Sri Lanka already granting visa-free travel to Indians. This has resulted in an influx of Indian tourists to the country. India is reported to be considering reciprocating this gesture. The emergence of low-cost carriers and the liberalisation of air routes have also helped this cause.

India is also taking a tough line against LTTE terrorism mainly due to increased Tiger activity in the Southern States. Tamil Nadu Police have apprehended a large number of LTTE cadres and sympathizers, both Sri Lankan and Indian. Increased surveillance by Indian and Lankan Navies has thwarted many attempts by the LTTE to smuggle weapons and ammunition in both directions.

The two countries have also been able to resolve issues pertaining to poaching by fishermen from both countries in each other’s territorial waters on many occasions. There are some outstanding cases, but one has to understand that the LTTE is known to use fishing trawlers for gun-running and human trafficking.

India’s assistance will be vital in resolving the conflict in Sri Lanka. India has unequivocally committed itself to ensuring Lanka’s sovereignty and territorial integrity. Sri Lankan leaders have kept Indian leaders apprised of the latest developments in the quest for resolving the conflict. Moreover, there are many things we can learn from India in terms of ethnic assimilation.

The CEPA will thus be a landmark in the centuries-old ties between the two countries. When fully implemented it will lead to a win-win situation for both countries. The full operationalisation of the SAARC free trade arrangements in the near future will make it even more meaningful and effective in the SAARC context.

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